Toll hike could boost BECL revenues

Bangkok Expressway (BECL) is likely to see a surge in revenue of 8 to 10 per cent per month, if it wins permission from the Expressway and Rapid Transport Authority of Thailand (ETA) to increase its toll charge in September, said an analyst of Kim Eng Securities (Thailand). Bangkok Expressway is the ETA's concessionaire to operate the first-and second-stage expressway systems.

The analyst said BECL generates revenue of Bt500 million per month on average.

Assuming that the ETA gives approval to BECL to increase its toll from Bt40 to Bt45 in September, Kim Eng predicts there would be a monthly revenue rise of 8 to 10 per cent - even though traffic volume would for a while decline by between 5 and 10 per cent following the hike.

Traffic volume in the first five months of the year numbered 880,000 cars per day on average.

"Although traffic volume may decline after tolls are increased, the track record of BECL in the past shows that the traffic volume will finally get back to the normal level," the analyst said.

Kim Eng recommends "buy" for BECL stock, with a fair price of Bt22.20 per share.

Phillip Securities said in a research note that the ETA would negotiate with BECL this month to conclude the toll rate revision.

The Office of the Attorney-General recently advised the ETA that it could adjust its toll collection without any conditions. The criteria used to calculate tolls are a standard formula based on the Consumer Price Index.

BECL had asked the ETA for permission to increase its toll charge from Bt40 per car to Bt55, but the state agency preferred Bt45.

Phillip Securities forecasts BECL's revenue this year to reach Bt7.39 billion, with a net profit of Bt1.73 billion.

The brokerage recommends "buy", with fair price at Bt24.70 per share.

It also suggests that investors keep an eye on the issuing of debenture stock of Bt7.5 billion and increases in interest rates, which will affect BECL's expenses.